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U.s. Federal Gasoline Tax

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Abstract Increasing the United States federal gasoline tax is currently a debated issue as a means of curtailing dependency on foreign oil and improving the country’s environment. An increases, however, would be regressive and would place another hardship on citizens who already feel as if taxes are too high. Because of the unpopularity of such a tax, nationally elected officials have not seriously floated the plan as means of raising revenue, but it could be used as a means to progressively cut income taxes.

Introduction Increasing the federal gasoline tax could reduce carbon emissions, benefit the environment, decrease the current government deficit, and cut our reliance on foreign oil. Higher taxes, however, are not met
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The purpose of this study is to examine both arguments and conclude whether a higher federal gasoline tax is warranted.

History In 1932, the first gasoline tax was created and cost consumers one-cent per gallon. Over the past 80 years, this tax has constantly increased. Events such as the Korean War in 1951 and the construction of interstate highway systems in 1959 caused the tax to raise to its current level of 18.4 cents per gallon, which is its current rate (Williams, 2005). Revenues collected have been utilized for a variety of purposes. For almost 20 years between 1932 and 1956, taxes collected were allocated to the general fund. The Federal Aid Highway Act of 1956 established the Highway Trust Fund, where all monies collected were allocated until 1983 when some funds were placed in a mass transit account. Today, 15.44 cents of every 18.4 cents is allocated to the Highway Transit Fund (Buechner, 2007). Controversy over the federal gasoline tax has always been present, with opposition from the public to every proposed increase. Recently, when discussions arose to use the tax to generate revenue, many public officials recommended suspending recent increases and some argued to suspend the tax in its entirety citing its drain on the economy. These suggestions were not, however, implemented.

State Gasoline
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